A good business credit score matters for two reasons. One has to do with getting funds.
Companies with good business credit scores are more likely to get approved for lending. Whether it’s a line of credit that allows expansion or a set of credit cards for employees, a good credit score can help business owners unlock the financing they need to grow.
The other has to do with business-to-business relationships. When a larger company decides to partner with a small business, or a government agency considers awarding a contract, the first thing they will often do is check the prospective partner’s credit report.
“It’s one of the most important things not only lenders look at, but also suppliers, or anyone you’re trying to do business with on credit,” says Pascaretta. “A lot of corporations that want to do business with small businesses will also look at a business credit report to determine if this is a business they can trust (and) they believe will be in business for the next couple of years.”
Does Business Credit Offer the Same Protections as Personal Credit?
While there are a lot of similarities between managing your personal credit and your business credit, there’s also a major divide when it comes to protections and accuracy. To begin with, business credit is not regulated under the Fair Credit Reporting Act.
“There’s no law that covers business credit reporting, and there’s also no industry standard,” says Detweiler. “Each of these commercial credit bureaus is out there trying to get customers to report, and they are all working with the vendors individually.”
If there is inaccurate information on your business credit report, you will have to work with each bureau individually to make it right. If you have a DUNS number with Dun & Bradstreet, you can file updates and disputes using the company’s online management portal. But if your concerns are with Experian or Equifax, you will be forced to print out your report, circle the disputed item, write a letter explaining why the information is incorrect, and provide supporting documentation for your claim.
Moreover, the Reliable Credit Card Accountability Responsibility and Disclosure Act of 2009 (the CARD Act) applies only to consumer credit cards, not business credit cards. If you end up paying any of your cards late, your business credit can be reported as being “days over term,” which can reduce your credit score and hurt your chances of securing financing and deals with other businesses.
How to Check Your Company Credit
If a small business has a DUNS number, several business lines of credit, or relationships with individual vendors, it may have a credit file that is not being monitored. Experts say the best way to manage business credit is by regularly keeping updated on their reports and business credit score.
“A lot of small businesses have no idea they have a credit profile they need to maintain,” says Pascaretta. “You want to show you have enough capital to stay in business, and can weather economic conditions like we have today. So, making sure you are monitoring that credit information is vital.”
But under federal law, businesses are not entitled to a free copy of their business credit report every year. Furthermore, if a business is denied a line of credit or other financial product, the bank is not obligated to reveal which credit bureau it requested information from.
There are several services that can help you navigate the world of business credit. While some offer free business credit scores, regular business credit monitoring software can cost anywhere from $29.99 to more than $199 per month.
Business Credit Resources
For businesses ready to manage and master their credit, here are four resources that can help navigate and understand a business credit report:
Free Business Credit Resources
Nav: In addition to offering summary credit reports and scores from the three business credit bureaus, Nav also helps business owners understand their credit picture with an Experian personal summary report and VantageScore credit score. Those seeking help building a file and finding financing options may benefit from paid subscriptions, which range from $29.99 per month to $49.99 per month.
Dun & Bradstreet CreditSignal: CreditSignal allows users to get a free copy of their Dun & Bradstreet business credit report and score for 14 days, giving them time to correct mistakes through the DUNS portal. Companies needing more insight after the two-week window must subscribe to their CreditMonitor Product for $39 per month, or $399 per year.
Paid Business Credit Resources
Experian Business Credit Advantage: For one annual payment of $189, Business Credit Advantage offers a self-monitoring option for businesses to continually access their business credit report and score, while also being able to see who pulled their file. The downside is that it doesn’t provide insight to the other two credit bureaus.
Credit Suite: Billing itself as a one-stop solution, Credit Suite helps businesses get established with the credit bureaus and potentially qualify for financing for $2,997, or seven payments of $597. In addition to getting help from a “credit concierge,” users will also have access to Experian Smart Business, giving them regular insight into their credit report.
Related Post:
